Sops likely for digital economy

Budget to have measures to help transition to cashless economy ACCORDING TO sources, the Centre is likely to bring down the tax collected at source limit so as to discourage cash transactions

The forthcoming Union Budget is likely to announce measures to promote cashless economy in the country to maintain surge in digital transactions post demo net is at ion.

Sources said that on the anvil may be steps to bring down limit for imposing tax collected at source (TCS), quoting PAN, and putting an upper limit on holding of cash by individuals.

Currently, one per cent tax collected at source (TCS) is imposed for using cash to buy goods and services over `2 lakh. According to sources, the government is likely to bring down this limit so as to discourage cash transactions. “If the limit for imposing TCS is brought significantly to around `1 lakh or even below, it will discourage people to use cash for large transactions,” said sources.

The government may also bring down the limit for providing PAN for cash transactions in the Union Budget and more items may be brought where quoting of PAN will be mandatory of the transaction is done through cash.

Currently, a cash payment of over `50,000 in connection with foreign travel (including fare, payment to travel agent and purchase of forex) requires PAN.

PAN is mandatory for cash payments of more than `50,000 for cash cards or prepaid instruments. PAN is also required for making a cash deposit of more than `50,000 or purchase of bank draft/pay orders/bankers cheque of the equal denomination on a single day, payment of life insurance premium of `50,000 in a year.

To discourage cash holdings, the government may announce upper limit for using cash for making transactions.

Special Investigation Team (SIT) on black money has recommended a “total ban” on cash transactions above `3 lakh and an act be framed to declare such transactions as illegal and punishable by law.